South Africa’s Latest Trade Figures Show Billions Leaving South Africa

South Africa recorded a trade deficit of R8.56bn in August from a revised surplus of R5.04bn in July, the SA Revenue Service (Sars) announced on Friday.

This brings the cumulative trade balance surplus in 2016 to R7.41bn, compared to a R35.10bn deficit in 2015 during the same period.

These statistics include trade data with Botswana, Lesotho, Namibia and Swaziland.

August’s deficit is attributable to exports of R90.24bn and imports of R98.80bn, Sars said.

Exports for the year-to-date grew by 9% from R679.27bn to R740.70bn, while imports of R733.29bn are 2.6% more than the imports recorded in January to August 2015 of R714.37bn.

On a year-on-year basis, August 2016’s R8.56bn trade balance deficit is an improvement from the deficit recorded in August 2015 of R10.45bn. Exports of R90.24bn are 3.6% more than the exports recorded in August 2015 of R87.10bn. Imports of R98.80bn are 1.3% more than the imports recorded in August 2015 of R97.55 billion, Sars said.

July 2016’s trade balance surplus was revised downwards by R0.18bn from the previous month’s preliminary surplus of R5.22bn to a revised surplus of R5.04bn, said Sars.

The rand was trading 0.21% higher at R13.84 following the news at 14:00.

A trade deficit was not in line with market expectations, said Karl Götte, head of commercial banking at Standard Bank.

“Businesses face challenging market conditions in a low-growth environment, which has been marked by weak household demand, which managed to grow only by 0.8% in the first half of the year,” he said.

“Global uncertainty is also impacting investment uncertainty within South African markets,” he said. “Times are challenging and running a business is becoming even more difficult, but there is potential to grow.

“Given these challenges, businesses will then be forced to consider optimal strategies for managing their working capital value chain to improve liquidity. Businesses would need to seek the advice of institutions that provide these solutions to plug the liquidity gap.”

Götte said the Business Confidence Index for the third quarter in 2016 improved from 32 index points in the second quarter to 42 index points.

“Increasing business activity and profitability in some sectors played a role in supporting the improved confidence,” he said. “The confidence in retail improved from 26 to 43 index points in due to the mood of retailers of non-durable goods such as food and groceries. Wholesale confidence increased from 47 to 56 points as export sales improved.

“It is expected that export conditions will continue to improve into the fourth quarter,” he said. “However, sentiments are that this confidence could be short-lived and may not signify the start of an up-cycle. There are still concerns about a possible credit rating downgrade as ratings agencies have been in the country recently to review the country’s performance.”

“South Africa avoided a technical recession in the second quarter which saw GDP growing by 3.3% following a 1.2% contraction in the first quarter. The agriculture, forestry and fishing sector has declined for a sixth consecutive quarter, signalling major challenges in the sector which would have an impact on employment numbers.”